In a 38-page report, Citigroup sided with Kate Spade, saying it has a better overall risk-to-reward ratio, including a 23% upside to Citi’s $42 price target, versus 15% upside for Kors.

Kate Spade, formerly known as Fifth & Pacific and Liz Claiborne before the company sold brands such as Juicy Couture to focus on its namesake brand, has “significant long-term margin expansion runway and opportunities to take U.S. and global market share on a more aggressive rollout strategy under ‘newer’ management,” Citi analysts Kate McShane and Oliver Chen said in a joint report.

Compared to Kate Spade, the analysts said Kors is a “larger, more mature” company with about four times the share of global handbag market, at 1.7% versus Kate’s 0.4%. Kors also has a larger retail fleet of about 400 stores versus Kate’s 170 stores. The analysts said they expect Kate Spade to continue to increase its square footage growth by about 25% a year on average over the next three years, generating comparable sales in the mid-teens. In comparison, they expect Kors to expand its average annual square footage by 15% and increase its comparable sales to the mid-to-high teens. Kate Spade, which has an operating profit margin of 18%, at about half the rate of Kors, also has significant room for expansion on that front, Citi analysts said.

We are “bullish on Kate’s global growth potential,” they said. Kate Spade is “likely to be the next major lifestyle brand. (Kors is) is at the top of its game. We rate Kors neutral as we view the risk/reward appears to be fair.”

With both retailers still having room to grow and both still dependent on North America for about four-fifths of their sales, both still have plenty of fans on Wall Street. Among 22 analysts covering the stock, 66% of them rate Michael Kors a buy, 23% a hold and 9% a sell, according to FactSet. In comparison, 70% of 10 analysts covering Kate Spade rank it a buy while the rest a hold.

On the other hand, 32% of 38 analysts covering Coach consider it a buy, with 66% a hold.

However, don’t count Coach out yet. The company, under a new management team and creative chief, also is trying to diversify and transform itself in its self-described “third chapter.” Still, after the company in January reported its worst same-store sales slump in at least 13 years amid declining store traffic, Wall Street is still finding proof that the company can regain its former luster. Ahead of Coach’s report next week, analysts said they expect Coach results will be hurt by wintry weather that hurt traffic especially hard at its outlet stores.

“We see downside risk into the print,” said Morgan Stanley analyst Kimberly Greenberger, adding Coach generates about 65% to 70% of its North American retail sales from outlets, the majority of which are outdoors and subject to heavier weather impact. She said online sales also aren’t likely to be strong enough as her online search analysis found that while Kors remains the top searched handbag brand and Kate Spade’s inched up, the number of searches for Coach continued to drop.

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Behind the Storefront is a blog about all things retail. It’s aimed at investors, shoppers and anyone else with a passion for learning about what drives consumer behavior. Hosted by Andria Cheng, Behind the Storefront will cover the business, brands and shopping behavior that’s behind some of the biggest companies, and largest employers, in the world. You can reach Andria at Acheng@marketwatch.com.